EconPapers    
Economics at your fingertips  
 

Mergers and acquisitions and bank performance in Europe: the role of strategic similarities

Yener Altunbas and David Marques-Ibanez

No 398, Working Paper Series from European Central Bank

Abstract: An unprecedented process of financial consolidation has taken place in the European Union over the past decade. Building on earlier US evidence, we examine the impact of strategic similarities between bidders and targets on post-merger financial performance. We find that, on average, bank mergers in the European Union resulted in improved return on capital. By making the assumption that balance-sheet resource allocation is indicative of the strategic focus of banks, we also find significantly different results for domestic and cross-border mergers. For domestic deals, it could be quite costly to integrate dissimilar institutions in terms of their loan, earnings, cost, deposits and size strategies. For cross-border mergers and acquisitions (M&As), differences of merging partners in their loan and credit risk strategies are conducive to a higher performance whereas diversity in their capital, cost structure as well as technology and innovation investments strategies are counterproductive from a performance standpoint. JEL Classification: G21, G34

Keywords: banks; M&As; strategic similarities (search for similar items in EconPapers)
Date: 2004-10
Note: 328790
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp398.pdf (application/pdf)

Related works:
Journal Article: Mergers and acquisitions and bank performance in Europe: The role of strategic similarities (2008) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2004398

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().

 
Page updated 2025-03-19
Handle: RePEc:ecb:ecbwps:2004398